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Derogatory Marks: How to Find and Fix These Credit Killers

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Your credit consists of a few factors, including your payment history, the age of your accounts and the amount of money you owe. Unfortunately, derogatory marks can drag down your credit score, and it can take time and effort to build it back up.

Derogatory marks, by the way, are negative events listed on your credit report that can lower your credit score. If you have this negative information, being aware of it can help you fix these marks and improve your credit.

To cover what we feel you need to know about derogatory credit marks on your report, let’s answer the following four questions:

What is derogatory credit?

A credit report is a history of your behavior as a borrower — the good and the bad. When negative information shows up on your credit report, it’s called a derogatory mark.

These derogatory credit marks act as red flags to lenders using your credit report to evaluate you. Derogatory marks are meant to reflect mistakes or events that show you have an imperfect payment history. If lenders see too many, they might offer you a more expensive product or reject your application altogether.

Each derogatory mark will lower your credit score and make you less creditworthy, but some are more serious than others. Additionally, some derogatory marks will affect your credit less as they age. A late payment from this year, for instance, will look worse than one from five years ago.

Do I have derogatory marks on my credit report?

You might already have some idea that you have derogatory credit. For instance, you might be aware that you missed a payment or declared bankruptcy recently.

Or perhaps you applied for a credit product or loan and were rejected. If so, don’t let it slide. Contact the lender and ask why you were denied. The lender is required under the Equal Credit Opportunity Act (ECOA) to tell you the specific reasons it deemed you non-creditworthy, according to the Consumer Financial Protection Bureau (CFPB).

Many lenders will send this information to you as a matter of course. If a lender doesn’t, request it within 60 days of rejection. The reasons can alert you to derogatory marks on your credit.

To know for sure if you have derogatory credit, however, you’ll need to review your credit reports from all three major credit-reporting agencies: Equifax, TransUnion and Experian.

Request free copies of your credit reports on AnnualCreditReport.com, the only website for free credit reports authorized by the Federal Trade Commission (FTC).

Once you get your free annual credit reports, review them for derogatory marks. You might find a summary of derogatory credit marks. Equifax, for example, has a section listing “negative information” on its credit reports. Other credit reports might list derogatory marks next to the relevant accounts.

Check both places for derogatory marks and compare credit reports to ensure the information matches up.

What types of derogatory marks are there?

When you’re checking your credit report for negative information, it helps to know what to look for.

Here are some types of derogatory marks that can end up on your credit report, in order from the least to most severe:

can be reported when it’s overdue by more than 30 days, and it will experience an uptick in severity every 30 days. Loan and credit defaults: For installment loans such as mortgages, auto loans or student debt, your loan might be listed as in default. When your loan defaults depends on your account agreement, but it’s typically after 120 to 180 days of nonpayment. Debts sent to collections: Once an account is overdue by a certain number of days, it might be

, which can put a new derogatory mark on your credit. Foreclosures or repossessions: If a mortgage lender foreclosed on a home you owned or you had a vehicle repossessed, those situations usually are listed as derogatory marks. Bankruptcies: If you

in the past seven to 10 years, this event will be listed on your credit reports.

How can you get derogatory credit marks removed?

If you find derogatory marks on your credit report, it can feel like those reminders of past mistakes, hardships or failures will never go away. They’re out there for lenders to see, and they continue to drag your credit score down.

Here are three things to know about getting derogatory credit marks removed from your report:

Most negative information falls off your report after 7 years

The good news is, bad credit will get better and improve with time — as long as you prevent further missteps or derogatory marks.

Credit-reporting agencies are required to remove most derogatory items from your credit history after seven years, including late payments, defaults, collections and foreclosures. Bankruptcies, however, can be listed on your report for up to 10 years.

A credit-reporting agency might miss an old derogatory mark due for removal, however. You might be able to petition for this information to be excluded from your credit report.

You can dispute credit report errors

Sometimes, negative information or derogatory marks end up on your credit report because of a mistake. It can be as simple as your credit card company misreporting your payment as late when it wasn’t. Or the credit-reporting agency might mistakenly list someone else’s bankruptcy on your report.

If you see something that looks unfamiliar on your credit report, it’s worth investigating, as it could be an error. On the other hand, it might be a legitimate debt you lost track of or even a library charge sent to collections.

Take some time to review the information. You have the right to dispute credit report errors. You can provide your own documentation to credit-reporting agencies or lenders to set the record straight.

The credit agency usually has 30 days to investigate the disputed information and verify its accuracy. If the information is erroneous, it will be corrected on all three credit reports.

There are other ways to improve your credit score

Maybe you have a derogatory mark that’s legitimate but dragging your credit score down. If you can’t fix the derogatory mark, look for other ways to improve your credit score:

Work to resolve outstanding debt problems. If you have a debt in collections or are behind on payments, try to quickly resolve those issues by

or payment plan. The longer the issues go unaddressed, the more severe the derogatory marks will be. Make payments on time, every time. You’ll build a positive payment history with each month that passes and start to counterbalance negative marks. Pay down high credit card balances. One factor that affects your credit score is

— or how high your credit card or line of credit balance is compared to your credit limit. The lower, the better, so if you make extra payments to lower your balance, it could give your credit score a boost. Open a secured credit card. A derogatory mark will lower your credit score and make it harder to

. However, you could qualify for a secured credit card. You put down a cash deposit on the card and get a tool to build a positive payment history and improve your credit.

Dealing with derogatory credit can be discouraging. It might take time and patience to see progress. But by learning more about your credit score, you’re taking steps in the right direction.

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Bad Credit

If You Want Consumers to Lose, Network Regulation is a Must – Digital Transactions

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After the current U.S. Congress was sworn in, a predictable chorus of merchants, lobbyists, and lawmakers demanded new interchange price caps and other government mandates to decrease credit card interchange fees for merchants. The tired attacks on credit cards are an easy narrative that focuses almost exclusively on the cost side of the ledger, while completely ignoring the cards’ important role in the economy and the regressive effects of interchange regulation. 

To lawmakers blindly acting on behalf of retailers, regulation is a brilliant idea—regardless of how it affects their constituents. For decades, they have promised these interventions would eventually benefit consumers. But the lessons from the Durbin Amendment in the United States and price cap regulation in Australia is clear. Although some policymakers bemoan the current economic model, arbitrarily “cutting” rates for the sake of cuts completely ignores the economic reality that as billions of dollars move to merchants, billions are lost by consumers. 

For the uninitiated, let’s break down what credit interchange funds: 1) the cost of fraud; 2) more than $40 billion in consumers rewards; 3) the cost of nonpayment by consumers, which is typically 4% of revolving credit; 4) more than $300 billion in credit floats to U.S. consumers; and 5) drastically higher “ticket lift” for merchants. 

Johnson: “To lawmakers blindly acting on behalf of retailers, regulation is a brilliant idea—regardless of how it affects their constituents.”

These are just some of the benefits. If costs were all that mattered, American Express wouldn’t exist. Until recently, it was by far the most expensive U.S. network. Yet, merchants still took AmEx because they knew the average AmEx “swipe” was around $140, far more than Visa and Mastercard. 

Put simply, for a few basis points, interchange functions as a small insurance policy to safeguard retailers from the threat of fraud and nonpayment by consumers. Consider the amount of ink spilled on interchange when no one mentions that the chargeoff rate for issuing banks on bad credit card debt exceeds credit interchange.

Looking abroad, interchange opponents cite Australia, which halved interchange fees nearly 20 years ago, as a glowing example of how to regulate credit cards. In truth, Australia’s regulations have harmed consumers, reduced their options, and forced Australians to pay more for less appealing credit card products. 

First, the cost of a basic credit card is $60 USD in many Australian banks. How many millions of Americans would lose access to credit if the annual cost went from $0 to $60? Can you imagine the consumer outrage? 

In a two-sided market like credit cards, any regulated shift to one side acts a massive tax on the other. For Australians, the new tax fell on cardholders. There, annual fees for standard cards rose by nearly 25%, according to an analysis by global consulting firm CRA International. Fees for rewards cards skyrocketed by as much as 77%.

Many no-fee credit cards were no longer financially viable. As a result, they were pulled from the market, leaving lower income Australians, as well as young people working to establish credit, with few viable options in the credit card market.

Even the benefits that lead many people to sign up for credit cards in the first place have been substantially diluted in Australia because of the reduction of interchange fees. In fact, the value of rewards points fell by approximately 23% after the country cut interchange fees.

Efforts to add interchange price caps would have a similar effect here in the U.S. A 50% cut would amount to a $40 billion to $50 billion wealth transfer from consumers and issuers to merchants. For the 20 million or so financially marginalized Americans, what will their access to credit be when issuers find a $50 billion hole in their balance sheets? 

The average American generates $167 per year in rewards, according to the Consumer Financial Protection Bureau. Perks like airline miles, hotel points, and cashback rewards would be decimated and would likely be just the province of the rich after regulation. Many middle-class consumers could say goodbye to family vacations booked at almost no cost thanks to credit card rewards.

As the travel industry and retailers fight to bounce back from the impact of the pandemic, slashing consumer rewards and reducing the attractiveness of already-fragile businesses is the last thing lawmakers and regulators in Washington should undertake.

Proposals to follow Australia’s misguided lead in capping interchange may allow retailers to snatch a few extra basis points, but the consequences would be disastrous for consumers. Cards would simply be less valuable and more expensive for Americans, and millions of consumers would lose access to credit. University of Pennsylvania Professor Natasha Sarin estimates debit price caps alone cost consumers $3 billion. How much more would consumers have to pay under Durbin 2.0?

Members of Congress and other leaders should learn from Australia and Durbin 1.0 to avoid making the same mistake twice.

—Drew Johnson is a senior fellow at the National Center for Public Policy Research, Washington, D.C.

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Increase Your Credit Score With Michael Carrington

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More than ever before, your debt and credit records can negatively impact you or your family’s life if left unmanaged. Sadly, many Americans feel entirely helpless about their credit score’s present state and the steps they need to take to fix a less-than-perfect score. This is where Michael Carrington, founder of Tier 1 Credit Specialist, comes in. Michael is determined to offer thousands of Americans an educated, informed approach towards credit restoration.

Michael understands the plight that having a bad credit score can bring into your life. His first financial industry job was working as a home mortgage loan analyst for one of the nation’s largest lenders. Early on, he had to work a grueling schedule which included several jobs seven days a week while putting in almost 12-hour days to make $5,000 monthly to get by barely.

“I was tired of living a mediocre life and was determined to increase the value that I can offer others through my knowledge of the finance industry – I started reading all of the necessary books, networking with industry professionals, and investing in mentorship,” shares Michael Carrington. “I got my break when I was able to grow a seven-figure credit repair and funding organization that is flexible enough to address the financial needs of thousands of Americans.”

With his vast experience in the business world, establishing himself as a well-respected business leader, Michael Carrington felt he had the power to help millions of Americas in restoring their credit. Michael learned the FICO system, stayed up to date on the Fair Credit Reporting Act (FCRA), found ways to improve his credit score, and started showing others.

The Tier 1 Credit Specialist uses a tested and proven approach to educate their clients on everything credit scores. Michael is leveraging his experience as a home mortgage professional, marketing executive, and global business coach to inform his clients. He and his team take their time to carefully go through their client’s credit records as they try to find the root of their problem and find suitable financial solutions.

The company is changing lives all over America as it helps families and individuals to repair their credit scores, gain access to lower interest rates on loans and get better jobs. What Tier 1 Credit Specialists is offering many Americans is a chance at financial freedom.

Michael Carrington has repaired over $8 million in debt write-ups and has helped fund American’s with over $4 million through thousands of fixed reports. “I credit our success to being people-focused,” he often says. “The amount of success that we create is going to be in direct proportion to the amount of value that we provide people – not just our customers – people.”

Because of its ‘people-focused goals, the Tier 1 Credit Specialist is determined to help millions of Americans achieve financial literacy. It is currently receiving raving reviews from clients who are completely happy with the credit repair solutions that the company has provided them.

Today, Michael Carrington is continuing with a new initiative to serve more Americans who suffer from bad credit due to little or no access to affordable resources for repair.

The Tier 1 Credit Socialist brand is changing the outlook of many families across America. To do this, the company has created an affiliate system that will provide more people with ways of earning during these tough economic times.

As a well-respected international business leader and entrepreneur with numerous achievements to his name Michael Carrington aims to help millions of Americans achieve the financial freedom, he is experiencing today. Tier 1 Credit Socialist is one of the most effective credit repair brands on the market right now, and they have no plans for slowing down in 2021!

Learn more about Michael Carrington by visiting his Instagram account or checking out the Tier 1 Credit Specialist website.

Published April 17th, 2021



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Does Having a Bank Account With an Issuer Make Credit Card Approval Easier?

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Better the risk you know than the one you don’t.

When it comes to personal finance, nothing is guaranteed. That goes double for credit. That’s why, no matter how perfect your credit or how many times you’ve applied for a new credit card, there’s always that moment of doubt while you wait for a decision.

Issuing banks look at a wide range of factors when making a decision — and your credit score is only one of them. They look at your entire credit history, and consider things like your income and even your history with the bank itself.

For example, if you defaulted on a credit card with a given bank 15 years ago, that mistake is likely long gone from your credit reports. To you and the three major credit bureaus, it is ancient history. But banks are like elephants — they never forget. And that mistake could be enough to stop your approval.

But does it go the other way, too? Does having a bank account that’s in good standing with an issuer make you more likely to get approved? While there’s no clear-cut answer, there are a few cases when it could help.

A good relationship may weigh in your favor

Credit card issuers rarely come right out and say much about their approval processes, so we often have to rely on anecdotal evidence to get an idea of what works. That said, you can find a number of stories of folks who have been approved for a credit card they were previously denied for after they opened a savings or checking account with the issuer.

These types of stories are more common at the extreme ends of the card range. If you have a borderline bad credit score, for instance, having a long, positive banking history with the issuer — like no overdrafts or other problems — may weigh in your favor when applying for a credit card. That’s because the bank is able to see that you have regular income and don’t overspend.

Similarly, a healthy savings or investment account with a bank could be a helpful factor when applying for a high-end rewards credit card. This allows the bank to see that you can afford its product and that you have the type of funds required to put some serious spend on it.

Having a good banking relationship with an issuer can be particularly helpful when the economy is questionable and banks are tightening their proverbial pursestrings. When trying to minimize risk, going with applicants you’ve known for years simply makes more sense than starting fresh with a stranger.

Some banks provide targeted offers

Another way having a previous banking relationship with an issuer can help is when you can receive targeted credit card offers. These are sort of like invitations to apply for a card that the bank thinks will be a good fit for you. While approval for targeted offers is still not guaranteed, some types of targeted offers can be almost as good.

For example, the only confirmed way to get around Chase’s 5/24 rule (which is that any card application will be automatically denied if you’ve opened five or more cards in the last 24 months) is to receive a special “just for you” offer through your online Chase account. When these offers show up — they’re marked with a special black star — they will generally lead to an approval, no matter what your current 5/24 status.

Credit unions require membership

For the most part, you aren’t usually required to have a bank account with a particular issuer to get a credit card with that bank. However, there is one big exception: credit unions. Due to the different structure of a credit union vs. a bank, credit unions only offer their products to current members of the credit union.

To become a member, you need to actually have a stake in that credit union. In most cases, this is done by opening a savings account and maintaining a small balance — $5 is a common minimum.

You can only apply for a credit union credit card once you’ve joined, so a bank account is an actual requirement in this case. That said, your chances of being approved once you’re a member aren’t necessarily impacted by how much money you have in the account.

In general, while having a bank account with an issuer may be helpful in some cases, it’s not a cure-all for bad credit. Your credit history will always have more impact than your banking history when it comes to getting approved for a credit card.

For more information on bad credit, check out our guide to learn how to rebuild your credit.

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